The devaluation of the official exchange rate has a direct impact on the energy sector. In the case of the naphthathis Tuesday the price agreement that had been in force since the beginning of the year expired, and the Refiners anticipate that they will apply a second increase so far this monthbecause they claim a delay in prices of 25%. The Government will convene them to try to renew the agreements. In the case of rates of electricity and gas, the increase in the official dollar has a direct impact on the rise in costs, which are dollarized, but the Ministry of Economy analyzes validating it only on high income bills.
The impact of the post STEP exchange rate jump will have a direct effect on the energy sector. This is how he described it Nicholas Gadano, an economist specializing in energy: “Practically the entire energy supply -local and imported production- is dollarized. With the devaluation, the imbalances in prices and tariffs in natural gas, electricity, and in the oil chain and its derivatives deepen again.
Naphtha
This Tuesday, Fair Prices for gasoline expired. It was an agreement signed at the beginning of the year between the Ministry of Economy, which heads Sergio Massa, and the four main refiners. In recent months they had enabled a monthly increase in 4.5% By August, it had already been applied. Therefore, despite there being no new agreement, on paper the oil companies had already increased what was defined for the month of August.
But Monday’s devaluation changed everything. Sources from the Ministry of Energy, headed by Flavia Royón, did not give details about future increases. for now, They announced that they will convene the companies to discuss “a price agreement path”. Royon will be in charge, and not Guillermo Michel, appointed by Massa to negotiate the expiration of all mass consumer price agreements. This Tuesday, the economic team held meetings for a price agreement for mass consumption and meat.
However, from an important refiner they anticipated: “We are going to have to increase, it is unsustainable not to do so after the devaluation of the official dollar.” This time, the oil companies will not wait for what is defined by YPF, a state-owned company that controls 55% of the market.
Private sector sources assured Ámbito that the delay in gasoline prices was at least 25%. “The Fair Prices agreement was signed at the end of last year, first of 4% per month, then 4.5%, against inflation that was between 6 and 7%,” they commented. In addition, in recent days an external factor has been added: the increase in the international price of Brent oil.
The rise in the official wholesale dollar, which since Monday climbed to $350, has a full impact on refiners because their costs are in dollars, since oil is a commodity. Inclusively, the cost of a barrel in Argentina is US$63 in the local market, but internationally it amounts to US$85. “Even so, the refiners receive pesos from the service stations and they are not going to pay oil”, explained from a company.
rates
After the devaluation, the economic team admits that electricity and gas rates are under scrutiny. After applying increases of 371% in one year in light for the highest-income sectors, the original plan of the Ministry of Energy was to apply one last increase at the end of the year. However, For these hours, additional increases are not ruled out at the highest income level, the so-called N1 and to industries and businesses. The dilemma happens that while the decision impacts on the pockets and more inflation, not taking it implies a greater expenditure of energy subsidies, before an IMF that claims to lower the fiscal deficit to make the disbursements.
As Ambito learned, the fact that increasing electricity for high-income families is being analyzed has to do with the fact that they have already had the total withdrawal of subsidies. “It could be reviewed so that they continue to cover the cost of energy,” they reported in Economy.
“The increase in the official dollar impacts the costs of electricity generation, because the costs have a high percentage of dollarized inputs, such as fuel, and there are even dollarized generation contracts,” he explained. Julian Red, economist specializing in energy. At the moment, there is a megawatt cost that applies between August and October, established by Cammesa, which is the one that the Ministry of Energy could intercede to modify via resolution.
However, Rojo explained: “For this cost change to impact the rate, the Government has to authorize it.” Currently, level 1 pays 100% of the cost of electricity generation, while the medium and low income levels do not even reach 15%. In the event that there is no transfer to rates, Rojo explained: “New costs and prices without updating imply a greater expenditure of energy subsidies.”
In the case of gas, there is also a strong impact of the dollar variation, in this case, 100%, because the Gas Plan contracts are in dollars. However, in the case of gas tariffs, to modify them would require a public hearing.
Source: Ambito
